Published: Thu, June 21, 2018
Entertaiment | By Mabel Barber

Why Starbucks Will Close 150 Stores Next Year

Why Starbucks Will Close 150 Stores Next Year

Starbucks said it traditionally closes about 50 underperforming locations annually.

Stabucks said it expects sales to increase just 1-percent in the third quarter of 2018. The announcement, made at the end of the trading day, jostled investors with Starbucks shares falling about 1.6 percent after hours.

Starbucks CEO Kevin Johnson says the global coffee chain will be "leaning into" creating more plant-based beverages as consumers continue to demand vegan options. "We must move faster to address the more rapidly changing preferences and needs of our customers". Schultz, who had already transitioned away from running the coffee chain's day-to-day operations, announced earlier this month he'd be leaving the company, fueling speculation he could be gearing up for a political career.

Starbucks announced Tuesday that it is closing 150 of its US stores in the next year, three times as many as the chain normally closes in that time period.

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Although business overseas has been booming and the chain has been opening more and more cafes, USA sales growth has stalled for the company that brought espresso to the masses.

It might feel like there's a Starbucks on every corner in America, but next year, there will be fewer stores on fewer corners-150 fewer, to be exact. Outgoing company chairman Howard Schultz said the closing may have cost the company tens of millions of dollars, although Johnson said that is not an excuse for the sales performance. It also said that it would return about $25 billion in cash to shareholders through buyback programs as well as dividend offerings - which was about a $10 billion increase from the previously announced target.

The company also said it would look to cut general and administrative expenses with plans to partner with an external consultant to speed up the process.

Starbucks Corp. (SBUX) plans to close 150 company-owned stores next year and put the brakes on the number of new licensed stores it opens.

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